Middle aged men and pensions in the industries. Much wealth has vanished…I notice a lot of apathy among employees such as teachers whose state plans have not declared losses yet except generally. The MA plan declared a 29% “loss” in value, but I have yet to see a clear statement about what the “loss” implies, how much is perhaps permanent as in owning worthless paper, and how current revenue can handle the next few years of retirements of boomers. Can anyone help out in this evaluation?
All over the country, pensions guaranteed by union-negotiated contracts are vanishing into thin air, casualties of bankruptcy, economic upheaval, and flawed legislation. Pensions have turned to dust at airlines (United, Delta), steel companies (Bethlehem), textile makers, and even electronics companies like Polaroid. The Big Three and their suppliers may roll back pension plans that support hundreds of thousands of retirees and their families. Entire towns have seen their economic base disappear; in Kannapolis, North Carolina, home to the textile maker Pillowtex Corporation, 23,000 private pensions were wiped out overnight when the company went bankrupt in 2003.
For workers whose pensions vanish, the only safety net is the federal Pension Benefit Guaranty Corporation, an insurance fund financed by employer premiums. Today, 1.3 million workers rely on the federal government to pay pensions that their employers no longer can or will pay; the number has more than doubled in the past eight years, and it keeps rising. The pbgc, its investments battered by the stock market crash, is now deep in the red, with a deficit of more than $11 billion instead of the $9.7 billion surplus it had in 2000.
But there is a growing population of workers whom the pbgc can’t fully compensate: those in heavy-labor industries, where bodies wear out long before the traditional retirement age, and where retirement typically starts in a worker’s mid-50s. When these companies bail on their pensions, the pbgc often offers significantly less. It also doesn’t cover health insurance, an essential benefit to workers who don’t qualify for Medicare and who often have children still at home.
“It’s a frightful societal development,” says Bill Brandt, a Chicago-based financial consultant who has served as a trustee during numerous bankruptcy proceedings. Between the disappearing pensions, slim prospects for new jobs, and vanished medical benefits, middle-aged workers like Hazel “will discover it’s the beginning of a very sordid story for the rest of their lives.”
In Longview, retirement promises were only the last to be broken. In 2000, the world’s largest aluminum producer, Alcoa, Inc. (then run by Paul O’Neill, whom George W. Bush would soon appoint as treasury secretary), had bought out the foundry’s owner, Reynolds Metals. But Alcoa quickly found itself embroiled in an antitrust battle, which required it to sell part of its stake in Reynolds; it also realized that the Longview plant used obsolete, polluting technology—”we were dinosaurs in the mud,” says one ex-worker bitterly—and that the plant was full of men whose pension and health ious were coming due.
(Bolding is mine.)